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As the oil and gas industry transforms itself to become sustainable in a lower commodity price environment, it is experiencing some notable shifts in labour force requirements, a skills mismatch and a shrinking labour force, according to two studies released today by PetroLMI, a Division of Enform.

“The downturn in the oil and gas industry that began in late 2014 has created a structural shift and a refocus – from one of growth to operational performance improvements and it is having significant implications for labour productivity improvements, hiring practices, the types of occupations and skills that are required, and the availability of the right talent,” says Enform’s Carol Howes, Vice President of Communications and PetroLMI.

The study found that Canada’s pool of oil and gas workers is shrinking as many displaced workers search for opportunities in other industries, and a growing negative perception regarding the industry’s viability that is discouraging new entrants from seeking employment in the industry. At the same time, while large numbers of highly specialized, educated and skilled workers remain unemployed, sectors that are beginning to rebound, such as the oil and gas services sector, are trying to address a skills shortage.

“There is a growing mismatch of worker skills and what is required by industry. Industry is just beginning to assess and discuss the implications that productivity enhancements, including the use of new technologies, undertaken over the last couple of years is having on occupational and skills requirements,” said Howes. “As industry cautiously adds back investment and as activity levels begin to pick up, the need to be proactive and to work together to address any looming skills and labour shortages is re-emerging.”

This report, the first of its kind, found that labour productivity declined by about 6 per cent during the period 2010-2014, when oil prices were high, but increased significantly – 32 per cent – during 2015 and 2016, corresponding with the significant drop in oil prices and capital spending and additional oil moving into production. A modest increase of approximately 2 per cent is expected over the next five years, along with a modest recovery in capital spending.

“The oil and gas industry averaged six times higher between 2010 and 2016 than the overall Canadian labour productivity. Even sustaining the productivity gains achieved in 2015-2016 would be viewed as a significant achievement for the industry,” said Howes. “Labour productivity in any industry, and economy, is vital for competition and for growth.”

Both reports suggest that in order for the oil and gas industry to maintain profitability and be competitive, an ongoing emphasis on labour productivity improvements, and innovation and technology will be required, and that will have a significant impact on occupations and the skills required in the future.

The report is funded in part by the Government of Canada’s Sectoral Initiatives Program.

Petroleum Labour Market Information (PetroLMI) is a leading resource for labour market information and trends in the Canadian petroleum industry. PetroLMI specializes in providing petroleum labour market data, analysis and insights, as well as occupation profiles and other resources for workforce and career planning.